Smart Budgeting as a Strategic Tool for Enhancing Non-Oil Revenues in Iraq

Abstract

This study explores the role of smart budgeting as a strategic tool to enhance non-oil revenues in Iraq during ongoing structural changes in the national economy. It is divided into three sections. The first outlines the conceptual framework of smart budgeting and non-oil revenues, emphasizing their complementary relationship and highlighting the distinctive objectives of smart budgeting compared to traditional approaches. The second examines Iraq’s current application of smart budgeting principles and the reality of non-oil revenues, which remain below 10% of total public revenues despite their diverse theoretical sources. The third reviews mechanisms to strengthen smart budgeting’s role in revenue generation, including efficient resource use, linking expenditures to measurable performance indicators, improving debt management, and enhancing transparency and accountability.

The findings reveal that Iraq lacks effective implementation of smart budgeting, with oil revenues still dominating at 90%. Institutional weaknesses limit diversification, creating a gap between the theoretical potential of smart budgeting and its practical impact. The study recommends adopting a results-based budgeting (RBB) system, linking spending to sectoral performance, expanding the tax base, integrating digital technologies for collection and monitoring, and reinforcing fiscal transparency to build trust and encourage voluntary compliance.